NEW YORK: Currency speculators increased their bets in favor of the US dollar in the latest week, according to data from the Commodity Futures Trading Commission released on Friday.
The value of the dollar's net long position rose to $26.73 billion in the week ended June 26, from $22.13 billion the previous week.
The Reuters calculation for the aggregate US dollar position is derived from net positions of International Monetary Market speculators in the yen, euro, British pound, Swiss franc, Canadian and Australian dollars.
Short euro bets, meanwhile, rose to 159,880 contracts from net shorts of 141,066 a week earlier as euro zone risks escalated in the run up to the European Union summit which concluded on Friday.
To be short a currency is to bet it will decline in value, while being long is a view its value will rise.
Prior to Friday's gains, the euro was on a downward trajectory as investors were skeptical that European leaders would come up with a viable solution to address the worsening debt crisis in the region.
The EU did come up with a proposal, but analysts remained leery of the deal and many viewed it as a short-term solution to an endemic problem.
Euro short positions could probably decrease next week given the unexpected EU outcome, but bets against the single euro zone currency will remain for some time.
Other notable changes in this week's CFTC report was the sharp reduction in the yen long position to 4,542 contracts.
Japan's Prime Minister Yoshihiko Noda faces the risk of a split in his party that could trigger a snap election after his signature tax increase plan cleared parliament's lower house on Tuesday despite its rejection by a group of party rebels.
The tax hike is aimed at curbing Japan's growing public debt, which already exceeds two years' worth of its economic output. Analysts at Morgan Stanley say the move to raise taxes will give the Bank of Japan more leeway to ease monetary policy and that is likely to be negative for the yen.
Speculators also reduced their short position on sterling to 758 contracts this week from 17,153 shorts previously even though analysts are widely expecting another round of quantitative easing in the UK.
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